U.S. AND SOUTH KOREA REACH AGREEMENT IN PRINCIPLE ON TRADE
It’s not exactly a new free trade agreement just yet, but the United States and the Republic of Korea recently announced that they have reached an agreement in principle on the general terms of amendments and modifications to the U.S.-Republic of Korea Free Trade Agreement (KORUS FTA).
The nations have also agreed on terms for a country exemption for South Korea from tariffs imposed on steel imports through Section 232 of the Trade Expansion Act of 1962 under the proclamation signed by President Donald Trump earlier this month. The arrangement with respect to steel imports was expected to take effect on May 1.
Negotiators in late March were finalizing the terms of the KORUS FTA negotiations, which are subject to ratification by the legislative bodies of both nations. In the U.S., this includes a 60-day consultation period with Congress. The revised agreement addresses issues related to investment, tariffs, trade in automobiles and trade remedies. Progress was also made in the areas of pharmaceuticals, customs, and textiles, according to a statement from U.S. Trade Representative Robert Lighthizer.
“The Republic of Korea is an important ally and key trading partner,” said Lighthizer. “Improving KORUS by rebalancing our trade and reducing the trade deficit will strengthen our national security relationship.”
REPORT: TARIFFS WILL COST U.S. JOBS
President Trump’s tariffs on steel and aluminum imports will cost five jobs for American workers for every one gained. Although the tariffs, will increase employment in steel and aluminum production, it will decline in every other sector of the U.S. economy, according to a report from the Trade Partnership. And that doesn’t include any employment effects from retaliation against United States’ exports, only of the tariffs themselves, the report emphasized.
Trump announced his intent in early March to impose tariffs of 25 percent on all U.S. imports of steel and 10 percent on U.S. imports of aluminum, other than from Canada and Mexico. The White House has since announced exemptions from the tariffs for imports from several other countries (including South Korea; see above).
The report finds that the tariffs will have positive impacts on U.S. steel and aluminum producers, but negative impacts on producers who use steel and aluminum. The tariffs will increase U.S. iron and steel and aluminum employment by 33,464 jobs, but will cost 179,334 jobs throughout the rest of the economy, for a net loss of nearly 146,000 jobs.
In the manufacturing sector alone, job losses in other sectors (36,076) would cancel out job gains for steel and aluminum producers. Workers in the fabricated metals sector will lose 12,800 jobs, vehicles and parts manufacturing workers will lose more than 5,000 jobs, and jobs on other transportation equipment industries will be reduced by 2,180.
“Two thirds of the lost jobs affect workers in production and low-skill jobs,” noted the report, which concluded the steel and aluminum tariffs “would reverberate throughout the U.S. economy in ways that will, on balance, reduce U.S. employment.”
ON THE OTHER TRADING HAND …
The Semiconductor Industry Association (SIA), which represents U.S. leadership in semiconductor manufacturing, design, and research, is in step with the Section 301 action taken by the Trump Administration to address China’s trade practices.
“The U.S. semiconductor industry shares the Trump Administration’s concerns regarding unfair and discriminatory trade practices that put at risk American intellectual property in China,” said John Neuffer, SIA’s president and CEO, in a statement.
“We are reviewing the administration’s Section 301 findings and proposed actions, and encourage an outcome that protects U.S. intellectual property in a manner that avoids a costly trade conflict. We welcome the opportunity to provide input on proposed tariffs, and hope to work with the Administration to avoid tariffs that would harm competitive U.S. industries and their consumers.”
The SIA is considered the voice of the U.S. semiconductor industry, which is one of America’s top export industries and a key driver of America’s economic strength, national security and global competitiveness.
“Intellectual property is the lifeblood of the semiconductor industry,” noted Neuffer. “Semiconductors are America’s fourth-largest export and are fundamental to the strength of our economy. U.S. semiconductor companies invest nearly one-fifth of their revenue in research and development to stay at the forefront of innovation. They should be able to compete in foreign markets without putting their critical IP at risk.
“At the same time, we welcome China’s participation in the global semiconductor value chain as long as it conforms with its international obligations and is consistent with market-based principles. In the end, strong protections for intellectual property serve the long-term interests of both the United States and China.”
USTR LAUNCHES WTO CHALLENGE AGAINST CHINA
The United States Trade Representative recently filed a request for consultations with China at the World Trade Organization to address China’s allegedly discriminatory technology licensing requirements.
The request came a day after President Trump announced he was taking measures against China under Section 301 of the Trade Act, which included imposing new tariffs and directing the USTR to pursue a case in the WTO to confront China over policies that result in unfair treatment for U.S. companies and innovators trying to do business in China.
According to the USTR, China is breaking WTO rules by denying foreign patent holders, including U.S. companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends. China also appears to be breaking WTO rules, according to the U.S. case against it, by imposing mandatory adverse contract terms that discriminate against and are less favorable for imported foreign technology.
“These Chinese policies,” alleges a USTR statement, “hurt innovators in the United States and worldwide by interfering with the ability of foreign technology holders to set market-based terms in licensing and other technology-related contracts.”